Europe shouldn’t dally on Syrian oil boycott

Europe should boycott Syrian oil. The United States has called for the biggest buyers of the country’s oil and gas to impose sanctions in an effort to further isolate the regime of President Bashar al-Assad and cut off a key source of funding behind the brutal crackdown on protesters. Economic penalties are never perfect but, in this case, at least markets won’t miss the supply.

Syria is not a big oil exporter. It produced 385,000 barrels of oil per day last year, or 0.5 percent of the world’s output, and exports just a third of that amount. That is still meaningful when measured against OPEC spare production capacity, which is estimated at 3.3 million barrels per day by the International Energy Agency — low by historical standards. But it is much less significant than Libya, which has already been slapped with sanctions.

What’s more, oil prices have eased somewhat amid concerns about the global economic slowdown. In August alone, the price of a barrel of Brent crude has fallen from a peak of $117 at the start of the month to $109 per barrel on Aug. 17. Weak economic data from Europe means demand is softening.

Boycotting Syrian oil would threaten export revenues which were worth around $3.5 billion in 2009 — funds that many Syrians do not believe they benefit from anyway. However, activists caution that the ban, at least initially, should not extend to imports of gasoline products, which are required for heating fuel. Imposing sanctions on exports but not imports would also accelerate the depletion of Syria’s foreign currency reserves, which the International Monetary Fund estimated in April were worth around $17 billion, but may have shrunk since.

There are risks. The effect of a boycott could be blunted if Iran, with decades of experience circumventing sanctions, helps Syria to do the same. A cheap loan or handout to Damascus from Tehran would be the easiest way around the sanctions: Iran is forecast to have foreign currency reserves worth $123 billion in 2011. But Iran is struggling with its